THE BLOG

Europe Needs A Road Map -- Or It Will Go Backwards

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Nicolas Berggruen, co-publisher, The WorldPost. This article is adapted from Mr. Berggruen's presentation to the Council on the Future of Europe in Madrid on Feb. 28.

MADRID -- Since the 2008 financial crisis, the rest of the world, even Japan, is recovering economically. But not Europe. Why?

The answer is not economic, but political. It is about the incomplete common governance structure of a region that has grown interdependent but in which each nation pursues its own solutions.

Individual countries, Spain most of all, have made significant reforms. But since all members of the euro zone share one currency, Europe as a whole has continued to stall. Where some remain behind, all will fail to move forward. That is the nature of interdependence.

In 10 years time, we will be talking about Europe's "lost decade" just as we've spoken in the past about Japan's lost decade. In today's highly competitive global environment, that is bad news for jobs -- especially for slashing youth unemployment -- and for living standards, which will continue to head downward. And it is bad news for civil peace.

Divisive social issues like migration will inevitably rise to the fore when the pie everyone must share grows smaller. Even the ever tolerant Swiss have just placed quotas on the free movement of people within Europe -- one of the very pillars of the idea of a Europe that is whole and free. These voices will only grow louder and more influential without a political solution.

Indeed, Europe may be digging a hole it can never get out of. A shrinking pie generates more nationalist sentiment as each national leader fends for themselves and survives politically by railing against the very notion of yielding any ounce of sovereignty that would make Europe as a whole stronger.

If Europe continues along this shortsighted path, its unique presence as a power center in the world that combines a liberal culture with high standards of living and a strong safety net will fade on the world scene.

As it stands, neither European citizens themselves nor the world at large know where Europe is headed.

As it is, the only forces that are mobilizing and building clout are those who want to tear Europe down -- or those outside, as in the Ukraine, who are shedding blood to be part of the European idea.

The paradox of this historical moment is that we see across the world -- in Ukraine, Egypt, Thailand, Turkey -- that elections in and of themselves are not the standard of legitimacy. Only strong institutions can sustain democracy. But institutions alone without democratic legitimacy conferred upon them, as we see in the European Union, are also not sustainable.

European citizens will simply not grant power to unelected and virtually anonymous bureaucrats in Brussels.

The days when political elites were invested with sufficient confidence by the public to chart the course forward for the European project are over. No next steps are possible that are not taken hand in hand with an engaged citizenry.

EUROPE NEEDS LEGITIMATE INSTITUTIONS

Ideally, Europe should move forward as fast as possible toward a strong, limited federal government. But if it is not realistic to take one great leap, Europe needs a clear and credible roadmap with milestones in order to engage the public as well as build the political coalition -- and the long-term confidence of job-creating investors -- necessary to get there.

If, for the first time, the choice of the Commission president really takes into account the popular vote for the European parliament in May, that will be a step forward for democratic legitimacy. It will be another step back if the powers that be in the European Council do as before, choosing an uninspired executive from the ranks of the stodgy old guard who has little connection to the public.

When the election is over in May, the next steps must be taken. First, and above all, a fiscal union starting with a banking union must be completed posthaste. That is the minimum condition for a European recovery.

Along with this, Europe as a whole must stimulate the continent's economy. Although individual nation-states may not be able to afford it, Europe as a whole can. The EU can borrow in the global capital markets, for example, for infrastructure and other job-creating projects.

As Mario Monti, the former Italian prime minister, has said. "The South, as it becomes more attuned to the merits of the social market economy, must be more determined in pursuing fiscal discipline and structural reforms. Likewise the North, Germany in particular, must appreciate that such efforts by Southern countries are unlikely to generate sustainable improvements unless Europe's policy framework becomes more growth-friendly."

We have seen now that countries like Spain and Portugal are doing their part. It is now up to Germany and its northern partners to act.

We have seen now that countries like Spain and Portugal are doing their part. It is now up to Germany and its northern partners to act.

After that, there are some areas of "commonality building" that could take place, perhaps even in foreign policy. German President Joachim Gauck's recent speech at the Munich security conference about Germany stepping up to the world stage makes this a more viable possibility than in the past. His vision of a more active Germany should be seized as an opening to align Germany with Europe instead of against it.

If a more democratically legitimate presidency comes into being, it will then create the opportunity to start sorting out the limited competencies that Brussels needs to build and maintain an integrated Europe.

But that does not mean that the more deeply integrated European states should not be able to agree on revising competencies -- taking into account the experience of the past and the strong hesitations registered by the public. Those competencies should likely be limited to common fiscal management, immigration and areas such as infrastructure, energy and foreign policy.

At the same time, Europe must clearly realize that absent integration in these areas, it will simply be relegated to a limited influence in a world where the strongly unified powers -- China and the United States -- will call the shots.

BOLD THINKING ON THE HORIZON

As in all other political endeavors, leadership is key to focusing efforts and crystallizing an image of the future in the minds of European citizens.

We see stirrings of this kind of leadership emerging from the most dire circumstances. I'm thinking here of Matteo Renzi in Italy, who has proposed the very kind of deep structural governance reforms -- new constitutional and electoral arrangements that will enable the forging of majority consensus and enable the long term implementation of policies that Europe as a whole needs.

This type of bold, forward thinking -- along with real results that show the benefits of integration -- is the only antidote to the reactionary social movements arising across Europe today.

The alternatives to building unity around a forward-looking vision are clear.

At best, Europe will be seen as the new Japan, subject to the whims of the global capital markets looking away from Europe to the U.S., China and the emerging markets.

At worst, the dismantling of Europe will be chaotically dictated from the street, perhaps even with charismatic populist leaders that would revisit the very politics of division and nationalism that destroyed Europe in the past.